Where Wages Have Grown the Most (and Least) Since the Recovery

Just in time for Labor Day, a recent Gallup poll has given some promising employment news. More than half of American workers say that their income has grown over the last five years, telling Gallup that they are making either a lot (28 percent) or a little (30 percent) more money since the onslaught of the economic crisis.

However, workers' wage growth has been uneven acrossthe country's metros. To chart where wages have grown the most during America's recovery, my Martin Prosperity Institute colleague Charlotta Mellander ran the numbers on average change in wages and salaries for all 350-plus U.S. metros between 2009 and 2012 (the latest year available) based on data from the United States Bureau of Labor Statistics.

Average wages have increased in most metros over the course of the recovery, as the map above shows. Workers in more than half of all metros saw their wages rise by more than $2,000. And in 16 percent of them, workers saw their average wages rise by more than $3,000 between 2009 and 2012. Conversely, workers in only 15 metro areas saw their average wages decline over this period, and just 63 metros saw average wages grow less than $1,000. Across the nation, workers saw their average wages increase by $2,330, as mean wages rose from $43,460 in 2009 to $45,790 in 2012.

Many of the largest green dots (the metros with the greatest wage growth) are in the economically vibrant, coastal metros that you'd expect -- San Francisco, Seattle, and New York -- as well as cities in the Energy Belt like Houston. But some metro areas in hard-hit industrial areas of the Rustbelt and a number of Sunbelt metros that were wracked by the housing crisis also saw substantial wage increases, which suggests that the economic recovery may finally be registering in workers' paychecks nationwide.

The table below lists the large metro areas (those with populations of one million or more people) that saw the largest "raises" in the post-recession era.

Large Metros with the Biggest Average Increases in Wages and Salaries, 2009-2012

Rank

Metro

Total Raise

2009 Wages

2012 Wages

1

Washington-Arlington-Alexandria, DC-VA-MD-WV

$4,600

$60,090

$64,690

2

Seattle-Bellevue-Everett, WA

$4,320

$53,240

$57,560

3

San Francisco-San Mateo-Redwood City, CA

$4,130

$61,940

$66,070

4

Houston-Sugar Land-Baytown, TX

$3,970

$44,880

$48,850

5

Providence-Fall River-Warwick RI

$3,740

$43,600

$47,340

6

Oklahoma City, OK

$3,460

$38,090

$41,550

7

Cleveland-Elyria-Mentor, OH

$3,380

$41,930

$45,310

8

Phoenix-Mesa-Scottsdale, AZ

$3,310

$41,930

$45,240

9

New York-White Plains-Wayne NY-NJ

$3,300

$56,250

$59,550

10

New Orleans-Metairie-Kenner, LA

$3,230

$39,210

$42,440

Data from U.S. Bureau of Labor Statistics.

Topping the list is Washington, D.C., where average wages increased by $4,600, from $60,090 to $64,690. D.C. has performed well over the course of the crisis and recovery, benefiting from its robust knowledge economy, highly educated talent pool and abundant federal spending. Two other tech-driven knowledge metros (San Francisco and Seattle) take second and third place. Both saw average wage increases of more than $4,000. In Seattle, wages rose $4,320, from $53,240 to $57,560. In San Francisco wages rose $4,130, from $61,940 to $66,070 -- the second highest average wages of all major metro areas, trailing neighboring San Jose-Sunnyvale. These metros also had high take-home pay to begin with -- above $60,000 in D.C. and San Francisco.

Metros in the and around the nation's Energy Belt also did particularly well, including Houston ($3,970), Oklahoma City ($3,460), and New Orleans ($3,230). Along with these Energy Belt metros and major knowledge economy hubs, workers saw substantial raises in the Rustbelt metro of Cleveland ($3,380) and Phoenix ($3,310) in the Sunbelt. This suggests that the economy in these struggling regions of the country is starting to rebound, as workers in at least some of these cities have begun to see their wages rise.

It's important to note that workers in Cleveland, Phoenix, Oklahoma City, Providence, Houston and New Orleans were making far less to begin with, with wages in the $40,000s or below, compared to the $60,000 plus levels for the knowledge metros with the highest wages.

But the places where workers have seen the biggest gains to their average paychecks are mainly in smaller cities. The table below lists the top metro areas overall, by increase in average wage. Greater Washington, D.C. and Seattle are the only big metros to make the cut.

Overall Metros with the Biggest Average Increases in Wages and Salaries, 2009-2012

Rank

Metro

Total Raise

2009 Wages

2012 Wages

1

Midland, TX

$6,530

$40,770

$47,300

2

Fayetteville-Springdale-Rodgers, AR-MO

$4,970

$36,790

$41,760

3

Fairbanks, AK

$4,790

$48,330

$53,120

4

Iowa City, IA

$4,620

$40,390

$45,010

5

Washington-Arlington-Alexandria, DC-VA-MD-WV

$4,600

$60,090

$64,690

6

Oakland-Fremont-Hayward, CA

$4,590

$54,590

$59,180

7

Bellingham, WA

$4,440

$39,870

$44,310

8

Seattle-Bellevue-Everett, WA

$4,320

$53,240

$57,560

9

Peoria, IL

$4,200

$40,170

$44,370

10

Fayetteville, NC

$4,160

$35,150

$39,310

Data from U.S. Bureau of Labor Statistics.

Smaller metros in the Midwest and West now rise to the top of the list. Midland, Texas is first with a whopping $6,530 increase in average wages. This oil and resource boom town -- where a full quarter of workers are employed in the in the mining, logging and construction sector -- registered a 4.6 percent gain in population between 2011 and 2012, making it the fastest growing metro in the country over that period. And the unemployment rate was an astonishingly low 3.7 percent as of June this year. Wages also grew more in Fayetteville, Arkansas, ($4,970); Fairbanks, Alaska ($4,790); and Iowa City, Iowa ($4,620) than they did in Washington, D.C., the top-ranked large metro. And wage growth in Oakland, California ($4,590) and Bellingham, Washington ($4,400) outpaced the raise taken home by workers in Seattle. Peoria, Illinois ($4,200) and Fayetteville, North Carolina ($4,160) round out the top ten.

Many of these metros are building on far lower baseline wages than their larger counterparts. Half the metros on the overall top ten list (immediately above), and a whopping 80 percent of smaller metros (those with less than one million people) started out with wages below the national average in 2009.

Despite the good news, there remain places where workers' wages have not begun to recover. Workers in 15 metros across the country actually saw their wages decline between 2009 and 2012. Most of these are in the Rustbelt and the Sunbelt, including Decatur, Illinois; Idaho Falls, Idaho; Palm Coast, Florida; and Lubbock, Texas. Nearly all of these smaller struggling places are found in Michigan, Illinois, Idaho, Arkansas, Alabama, Florida, Texas and California. They are a mix of struggling old industrial centers, like Battle Creek, harder hit resort centers like Palm Coast, and agricultural towns in California, like Salinas.

The table below shows the large metro areas that have seen the smallest wage gains. While robust wage recoveries in Cleveland and Phoenix suggest that parts of the Rustbelt and Sunbelt are beginning to turn around, the list of places with the smallest wage gains remains dominated by Midwestern and Southern metros. It includes once fast-growing Sunbelt metros like Las Vegas ($1,330), Orlando ($1,000), Miami ($1,630), and Tampa ($1,640) -- all metros which were buffeted by the housing crisis -- as well as hard-hit industrial regions like Buffalo ($1,760) and St. Louis ($1,760).

But there are also some surprises on the list. Dallas, where wages increased by just $1,340, is often held up as an example of low unemployment, population and job growth, and relatively stable housing market prices. The twin cities of Minneapolis-St. Paul have also been seen as the center of a stable, knowledge-oriented economy, less susceptible to a boom and bust. But perhaps the biggest surprise is that Chicago, a city and metro that is often held out as a model of urban regeneration, is the only large metro area whose workers saw average wages rise less than $1,000.

Largest Metros with the Lowest Average Increases in Wages and Salaries, 2009-2012

Rank

Metro

Total Raise

2009 Wages

2012 Wages

1

Chicago-Naperville-Joliet, IL

$830

$48,910

$49,740

2

Orlando-Kissimmee, FL

$1,000

$38,430

$39,430

3

Memphis, TN-MS-AR

$1,310

$39,380

$40,690

4

Las Vegas-Paradise, NV

$1,330

$40,070

$41,400

5

Dallas-Plano-Irving, TX

$1,340

$46,110

$47,450

6

Louisville-Jefferson County, KY-IN

$1,570

$39,970

$41,540

7

Miami-Miami Beach-Kendall, FL

$1,630

$41,070

$42,700

8

Tampa-St. Petersburg-Clearwater, FL

$1,640

$40,590

$42,230

8

Minneapolis-St. Paul-Bloomington, MN-WI

$1,640

$48,670

$50,310

10

Buffalo-Niagara Falls, NY

$1,760

$40,960

$42,720

10

St. Louis, MO-IL

$1,760

$42,900

$44,660

Data from U.S. Bureau of Labor Statistics.

The overall trend in wages give us cause for more optimism this Labor Day than we've had in quite a while. While there is still a ways to go and while too many workers in too many places remain out of work or underemployed, these data substantiate just how extensive the reach of wage recovery has been across the board.Nearly all U.S. metro areas - 96 percent of them - saw some increase in average annual wages over the first several years of the recovery. All in all, the extent and diverse nature of America's wage recovery is a good sign, as workers across the country have seen the beginnings of a return to wage growth.

About the Author

Richard Florida is Co-founder and Editor at Large of CityLab.com and Senior Editor at The Atlantic. He isdirector of the Martin Prosperity Institute at the University of Toronto and Global Research Professor at NYU.
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